Federal Government Announces New Mortgage Rules for 2018

Wednesday, Oct 18, 2017

Who is affected by new mortgage rules

Last October the Canadian Federal Government added a stress criteria to insured mortgages for Canadians.  Well just this Monday October 16th, 2017 they have announced the stress test will be added to uninsured mortgages.  Even if you have 20 % or more to put down as a downpayment you will still be required to pass this stress test. 

 

This impact could be as much as a 20-25% reduction in your ability to borrow for a mortgage.  Planning on buying a home for $600,000 and putting 20% down could mean you might now only qualify to buy a home at around $ 500,000.  

Thankfully wont apply to mortgage renewals but seems to me that limits the consumers ability to shop around.  Seems anti-competitive to me.

From CBCNews/ Business Article dated October 17, 2017

"The stress test is designed to simulate a borrower's financial situation by assuming they would have to pay back the loan at the posted average — not whatever deal they were able to negotiate. So under OSFI's new rules, borrowers would be stress tested at either the five-year average posted rate, or two per cent higher than their actual mortgage rate — whichever one is higher.

Notably, the new stress test rules won't apply to mortgage renewals as long as they are with the borrower's existing lender."